Legislators drop the ball on ride-sharing, then bash DMV

Depending on your musical tastes, what happened with the California Department of Motor Vehicles over the weekend was either part of a long and winding road, or a pit stop on a long, strange trip.

In an abrupt U-turn, the DMV retracted its ruling that drivers for rideshare companies such as Uber and Lyft must obtain commercial license plates.

In that advisory dated Jan. 5, the DMV had written, “Any passenger vehicle used or maintained for the transportation of persons for hire, compensation or profit is a commercial vehicle. Even occasional use of a vehicle in this manner requires the vehicle to be registered commercially.”

These transportation network companies allow nonprofessionals to drive customers for money, meaning anyone can make extra cash off their personal vehicle. These app-based companies are in most major cities, often cheaper than taxis and booming in popularity.

Never miss a local story.

Sign up today for a free 30 day free trial of unlimited digital access.

Not surprisingly, traditional taxi companies despise them, arguing that Uber and Lyft provide essentially the same service without having to comply with the many regulations that taxis must follow. Hence the DMV’s commercialization requirement, which the rideshare firms vigorously denounced as a major threat.

The DMV didn’t cave, though, until Republicans, reacting to media coverage of the ruling, screamed in outrage. “We jumped the gun,” department director Jean Shiomoto said in an emailed mea culpa, promising further review and analysis.

Is there a double standard? Should we regulate marginal commercial behavior the same as we regulate full-time commercial behavior?

Uber and Lyft say no. Of course they do. Regulations cost money and eat into profits. There are, however, distinctions between full-time employees and contract workers, often exploited by companies that know it’s much cheaper to pay for the work than the worker.

State lawmakers have a lot of nerve because the problem isn’t the double standard, but an outdated law. The DMV based its original decision on a 1935 statute.

Legislators are threatening to pass a bill? We don’t pay them to make threats. We pay them to make laws that, among other things, help agencies carry out their responsibilities. They surely know this, having passed Assembly Bill 2293 last year, paving the way for insurance companies to offer hybrid personal-commercial policies to Uber and Lyft drivers starting this summer.

The DMV was actually doing its job – administering requirements based on existing law – and only issued a ruling because it had received countless inquiries from dealers and customers statewide. Perhaps the agency wouldn’t have been compelled to act had lawmakers crafted an appropriate bill. And if a bill is being crafted, rather than threaten DMV officials, notify them. Indeed, seek their counsel.

Why the Republican bluster then?

My guess: The issue has great political potential. It has a deep fundraising base – Uber was just valued at $18 billion. It has Silicon Valley appeal, possibly leading to more donors. It centers on deregulation, a core conservative message. It matters to a younger, digitally savvy generation, which can mean votes from a traditionally Democratic demographic.

There’s something else. Because Democrats dominate this Legislature, they’re able to win every single procedural motion and often can block Republican bills only to introduce the same bills and claim credit for the ideas. Republicans noisily claiming ownership of an issue, as they seem to be attempting here, can prevent that.

The long and winding road here is that if Democrats didn’t do what they do, Republicans hadn’t done what they did, and maybe if both did what we paid them to do, the DMV wouldn’t have had to do anything.

Frankly, if Republicans were smart, rather than resisting regulation entirely, they’d concede that Uber and Lyft are under-regulated and argue that taxis are over-regulated. Both industries should be subject to proper insurance and safety standards that give competitive advantage to no one. Then we can have true competition and let the market decide.

Bruce Maiman is a former radio host who lives in Rocklin. Contact him at brucemaiman@gmail.com. Follow him on Twitter @Maimzini.